It’s commonplace for people to regularly shop around for better deals on their credit cards and insurance plans, but when was the last time you thought about finding a more competitive loan rate?
One of the most common reasons that people end up with debt that they can’t afford to repay is because they’re saddled with interest rates that are simply too expensive.
Since installment loans generally come with a higher rate of interest than traditional personal loans, picking up a lower rate can have a significant impact on the overall amount you’ll end up repaying.
Let’s take a closer look at how debt consolidation loans work and how you can get a great rate on your next line of credit today.
How Do Debt Consolidation Loans Work?
Debt consolidation loans give you the opportunity to bring together some or all of your outstanding credit into one, convenient monthly repayment with the added incentive of a more competitive interest rate.
Once you’ve calculated how much debt you wish to consolidate and have received your loan, you can use these funds to clear off your other debts, bringing all balances under one umbrella.
You’ll then repay this loan exactly as you would any other personal loan with the ultimate goal of clearing your credit balances together.
Whenever you’re looking at loans to consolidate debt, it’s also a great opportunity to look at your existing financial circumstances and ensure that your loan is structured to clear your debt quickly and affordably.
This doesn’t just mean extending the term to reduce payments. If your financial situation has improved since taking out your original credit, it may now be more beneficial to increase your repayments, reduce your term and ultimately bring down the total amount repaid across your loans.
What Can I Use Debt Consolidation Loans For?
Whenever you’re combining debt together, remember that you’ll be used funds from the new loan to clear existing lines of credit. Some of the most common debts that people clear with debt consolidation loans include:
- Credit card debt
- Personal loan debt
- Car finance
- Store credit
They aren’t typically used for larger debts such as mortgages. In this instance it’s more common to seek out a standard remortgage or refinancing of other debt secured against your property.
Am I Eligible For Loans To Consolidate Debt?
To be eligible for debt consolidation loans, you’ll need to fulfil the following legal conditions to be considered.
- Be a permanent US resident living in an eligible state
- Have a US checking account in your name (ideally with a valid debit card)
- Be at least 18 years of age when you apply
- Be able to comfortably afford your repayments
- Have existing debt that you wish to consolidate
This list is by no means exhaustive and each lender will ask you to meet their own unique eligibility requirements when you apply. You may be asked to provide additional documents to support your application such as your Social Security Number, pay slips, photographic identification or utility bills.
Can I Apply For Debt Consolidation Loans With Bad Credit?
Yes! There are thousands of specialist bad credit lenders who deal with debt consolidation loans. If you’ve been refused credit elsewhere the good news is that there are plenty of other lenders ready to say yes.
In fact, it’s a great idea for those who struggle to manage credit to wrap their existing debts into one payment. It makes it far easier to administer and will help you to keep on top of a simpler debt repayment structure rather than overseeing multiple monthly repayments.
How Can I Apply For Debt Consolidation Loans?
Applying for loans for debt consolidation is now easier than ever before thanks to online comparison services which can help you to compare debt consolidation loans in minutes.
Before starting your search for debt consolidation loans, it’s essential that you first gather together all of the information you can on your existing debts. Some of the details you’ll want to make specific note of will include:
- The total amount of debt you have outstanding
- The monthly repayments that you’re currently making
- The interest rates on these loans
- Information on any early repayment fees
It’s also worth thinking about whether any additional cash would benefit you at this time as this additional borrowing can also be built into your new loan application.
Once you’ve established the total amount you wish to consolidate, it’s time to work out a suitable repayment term. Most lenders and online comparison sites will allow you to play around with different terms so you can see in real time how this will affect your monthly repayments.
Its now time to compare loans to consolidate debt by providing a little more information about you and your final circumstances. Most applications will ask for your:
- Employment status
- Pay dates
- Social Security Number
- Your military status
Once you’ve finalised your application, your chosen lender will come back with an instant decision on the loans for debt you’ve applied for. If accepted, funds will typically be transferred into your account within 24 hours, leaving you to clear your other debts and get your finances back on track.